US moves to place new duties on steel from China

Updated: 2009-12-31 09:41
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WASHINGTON: The US government is imposing new duties on imports of steel pipes from China, the latest sign of trade tensions between the two countries.

The case is the largest steel trade dispute in US history and will affect about $2.8 billion worth of Chinese imports.

A group of US steelmakers and the United Steelworkers union sought the duties in April, arguing that the Chinese steel industry was flooding the US market with pipes sold at unfairly low prices, a practice known as "dumping."

The Chinese companies also benefited from government subsidies, the US industry said.

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US Steel, one of the eight companies that brought the complaint, said in an e-mailed statement that it is "pleased" with the decision. The company noted that imports from China tripled from 2006 to 2008.

"This enormous surge of unfairly traded goods resulted in an overhang of inventory that crippled the domestic industry," the statement said.

US production of steel pipe fell by about 70 percent in response and almost 40 percent of the industry's work force was laid off, US Steel said.

The US International Trade Commission voted on Wednesday to impose duties between 10.36 percent and 15.78 percent on the pipes, which are mostly used in the oil and gas industries. Those duties are intended to offset the government subsidies that the US government says China provides its steelmakers.

The ITC will decide in the spring whether to impose additional tariffs of up to 96 percent to penalize Chinese steelmakers for dumping.

Roger Schagrin, counsel for the United Steelworkers and five steel manufacturers, said the decision could enable the US steel industry to ramp up production and re-hire workers by the second half of next year, once current inventories of steel pipe are sold off.

Prices for steel pipe fell by half from their peak in 2008 through September 2009, he said, driven down by low-priced Chinese imports.

The six-member ITC voted unanimously that the US industry was harmed or threatened with harm by the imports.

But Daniel Porter, a lawyer representing the Chinese steel exporters, said the US industry was hurt by a boom-and-bust cycle that resulted when the price of oil soared to about $140 a barrel in the summer of 2008, only to drop below $50 less than a year later.

Higher oil prices spurred more drilling, which caused oil companies to order more of the pipes. Those orders dried up when prices fell, Porter said.

"If demand collapses, that affects everyone," he said. "It has nothing to do with imports."

Porter wouldn't comment on whether the Chinese exporters will appeal the ruling. The companies could appeal to the US Court of International Trade in New York, or China's government could take the fight to the World Trade Organization.

The Chinese embassy couldn't be reached for comment.

In addition to the USW and US Steel, the complaint was filed by V&M Star LP; V&M Tubular Corp; TMK IPSCO; Evraz Rocky Mountain Steel; Wheatland Tube Corp; Maverick Tube Corp; and Northwest Pipe.

China and the US are engaged in several trade disputes over market access for goods ranging from poultry and tires to Hollywood movies.

In another steel dispute, the Commerce Department said on Tuesday that it may impose antidumping tariffs of 14 percent to 145 percent on $91 million of steel grating imported from China. It defines steel grating as two or more pieces of steel joined by any assembly process. The department will make a final decision in that case in April.